The cost of leasing a new car in the UK has risen 9% in the past 12 months, new research by accountancy firm UHY Hacker Young has found.
The research shows that the monthly cost of leasing a basket of some of the most popular car models in the UK rose from an average of £232 in February 2017 to £253 in February 2018.
UHY Hacker Young said a weak Sterling has pushed up the cost of imports for car manufacturers, and with the pound still 14% down against the Euro compared with before the Brexit vote, manufacturers are starting to pass their increased supply chain costs on in the form of higher forecourt prices.
It added that UK new car prices are also beginning to be pushed up by strengthening sales in European markets.
In recent years, manufacturers have tended to push excess unsold stock from Europe into the more-active UK market, resulting in lower prices here. As sales in Europe have risen in recent months, some manufacturers have been able to reduce this, cutting the need for discounting in the UK.
Paul Daly, partner at UHY Hacker Young, said: “Car leasing prices now look to be on the rise again. UK car buyers have benefited from a period of deep discounting, but that seems to be coming to an end.
“There are still some great discounts around, particularly for vehicles financed under PCP (personal contract plan) arrangements and now could well be a good time for consumers to change their vehicles before prices rise further.
“Long-term Sterling weakness means manufacturers are having to shift their rising supply chain costs on to consumers.”
The research found the three biggest rises in monthly cost were all among cars made by German manufacturers (see table below) – the Mini Cooper D (up 31%), Audi A3 (up 23%), and Mercedes-Benz C220 (up 19%).
These three largest increases in cost are among larger-engined diesel models, which may reflect the waning popularity of diesel. Contract hire providers are likely to be increasing the cost of leases to compensate for the falls they expect in the residual value of diesel cars.
UHY Hacker Young added that heavier discounting among prestige carmakers now appears to be coming to an end. Over the last two years, consumers have often found that cars from German manufacturers have had lower per-month price tags than mass-market brands.
Daly added: "The days of leasing an Audi A3 for less than a Vauxhall Astra appear to be over for now.”